Why a green budget is good for the economy
MAKING a country's budget green is not about how much money is allotted to tiger or forest protection. It is about integrating it into every aspect of your economy and ensuring there is no wasteful use of natural resources. For years, green issues were either overlooked or hastily added as an appendage to the finance minister's budget speech in Parliament. While this time round, Arun Jaitley may have done better, we are still a long way from ensuring that there is full integration of green concerns into all aspects of the economy or a recognition by our politicians that investing in the environment is good for the economy as well.
A careful perusal of Jaitley's speech shows that he has slashed the budget of the ministry of environment, forests and climate change, although a subsequent PTIreport disputes this since money from other programmes has been added to the environment ministry's kitty. The funds for the ministry of new and renewable energy have also been reduced even as an increase in the generation target for renewable energy has been announced, to 175,000 megawatts by 2022.
On the positive side, there has been some attempt to discourage "dirty coal" through an increase in the clean energy cess from Rs.100 to Rs.200 per tonne of coal to finance clean environment initiatives. However, there is no clarity on how this money will be used for clean environment initiatives and by which department of the government, given that previous funds too are lying unused.
The finance minister also announced around Rs.150 crore for the national afforestation programme, a separate programme for sustainable groundwater management and the setting up of a Rs.400 crore fund to encourage organic farming.
However, for all the grand commitments that India made at the Paris climate summit what is missing in this budget is a conscious transition to a low-carbon economy. There are some initial shoots of change that can be seen through the infrastructure cess on private cars, as Arunabha Ghosh and Abhishek Jain of the Council on Energy, Environment and Water write in Mint, but these are far from radical.
Here is what is missing-any mention of allocation of funds for the protection of India's large swathes of existing forests, lakes, wetlands and water resources or the biodiversity found in them as these are the drivers of the nation's economic growth and health.
From minerals extracted from the forests to several thousand tonnes of sand removed from our river beds, natural resources fuel the economy in all forms by providing raw material for high-rise buildings, water for thermal power plants. What are we doing to restore and protect these natural resources so they continue to power our economy? Apart from a mention of a fund for protecting groundwater, the budget assumes that growth can happen without these natural resources.
In November 2011, the United Nations Environment Programme released the Green Economy Report, compiled by hundreds of economists from around the world, with the aim of demonstrating the benefits of transitioning to a green economy. The report shows how "a strategy of reallocating investments towards the green economy may lead to slower potential economic growth for a few years, as renewable natural resources are replenished (an effect that can be strong in some sectors, such as fisheries), but will result in the long run in faster economic growth". The report also underlines other benefits to the economy as it reduces the risks of adverse events associated with climate change, energy shocks and water scarcity while creating increased employment.
So dear finance minister, the next time around how about the creation of a green protection fund? This fund could be used to protect existing forest belts, let our rivers flow free of garbage and sludge, provide front-line forest protection staff with better equipment, and better protect our rich biodiversity.
The advantages of investing in our natural resources are many. For instance, the Center for International Forestry Research estimates that families living in and around forests derive an average of one-fifth to one-fourth of their income from forest-based resources.
In many countries, including India, nontimber forest products contribute prominently to local economies and livelihoods, though their role is understated. The Food and Agriculture Organization estimated in 2005 that the value of non-timber forest products extracted from forests worldwide amounted to $18.5 billion.
Unfortunately, the value and services that forests render are rarely captured in national accounting systems. A green budget is needed not just to satisfy fringe tree huggers like me; it's needed to fuel that intense economic growth you want for the country.